Last updated 26September 2018
In accordance with the AIM Rules for Companies, Strategic Minerals Limited (“Strategic Minerals” or the “Company”) is required to maintain on its website details of a recognised corporate governance code, how the Company complies with this code and an explanation of any deviations. Such information will be reviewed at least every 12 months.
Strategic Minerals has adopted The Quoted Companies Alliance Corporate Governance Code 2018 (the “QCAC” or the “Code”) and applies the ten principles of the QCAC as set out in this statement.
I am pleased to present the Corporate Governance Statement for Strategic Minerals.
The aim of the Board is to function at the head of the Group's management structures, leading and controlling its activities and setting a strategy for enhancing shareholder value. Regular meetings are held to review the Group's forward planning. The Board currently consists of a Non-Executive Chairman, a Managing Director, an Executive Director and a Non-Executive Director. The Directors recognise the importance of sound corporate governance commensurate with the size and nature of the Company and the interests of its shareholders and, in 2018, formally adopted The QCA Corporate Governance Code after noting that it had, effectively, implemented its content in its previous arrangements.
Alan Broome AM, Non-Executive Chairman
Principle 1: Establish a strategy and business model which promote long-term value for shareholders
The Board has developed and enunciated a strategy and business model as detailed in the annual report and on this website under the tab . The Board considers the Company’s strategy provides a framework for medium to longer term growth in shareholder value.
The major risks to the Company’s overall strategy stem from the potential failure to maintain access to the Cobre magnetite stockpile and over extending its cash requirements.
With respect to the exposure to operating cash flow only from the Cobre magnetite stockpile, the Board actively embarked on a search for a near term cash flow asset in our preferred mineral suite. With the addition of Leigh Creek Copper Mine, the Board feels it has, to a large extent, mitigated this risk, although it has now developed a new risk associated with the re-commencement of operations at Leigh Creek Copper Mine. Again, Management and the Board have sort to address such concerns through ensuring that sufficient resources are allocated to the project to give it the greatest chance of success.
In relation to cash flow management of the Company, Management and the Board keep a close on on exiting and expected cash flow resources and plans for committing these to project development and covering of corporate overheads. Additional to this, the Board regularly is in contact with market participants to ensure that sufficient interest is maintained in the market and that the Company can, generally, raise funding as required.
A consideration of broader risks on the Company can also be found in its Annual Report.
Principle 2: Seek to understand and meet shareholder needs and expectations
Shareholder input and communication has been actively sought by the Board through direct contact with shareholders at both the Annual General Meeting, shareholder information evenings (sometimes combined with the Annual General Meeting), monitoring of social media platforms, regular RNS releases, interviews on both Proactive Investors and Vox Markets (including occasional shareholder Q & A sessions) and direct one on one meetings for larger investors. At all time, due regard is given to the price sensitive nature of comments.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
As the Company is involved in the mining industry, the Board is highly cognisant of its responsibility not only to shareholders but in the broader community. As such, it has adopted a policy to ensure adequate community consultation is undertaken in the areas where we operate. Notably, in New Mexico and in Cornwall, communication with local residents and active involvement in the community has been encouraged. Additionally, the Company has a policy to, where possible, employ local residents when undertaking operations. To date, this has proven highly successful with all locations recording either none or extremely low levels of community dissent. These policies will also be maintained at the Company’s Leigh Creek operations.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
The management of the business and the execution of the Group’s strategy are subject to a number of risks. The Company regularly reviews the principal risks that face the business and assesses appropriate responses to mitigate and, where possible, eliminate potential adverse impact.
The Board formally reviews risk parameters of the Company in line with its publication of both Annual and Interim Financial Statements. However, it is constantly undertaking a review of risk and, as a mining company, has adopted and engendered a safety culture within the Company to ensure that personnel safety is considered above financial reward.
Further information on the Company’s Safety Committee and its policies are set out under Principle 9 below.
Information in relation to the Key Risks and Uncertainties that are relevant to Strategic Minerals are set out in the Strategic Report of the 2017 Annual Report (starting on page 7).
Principle 5: Maintaining the Board as a well-functioning, balanced team led by the chair
There are currently four (4) Board Directors (two of which are non-executive) and the Board considers that, at this time, this is appropriate to the Company’s current level of operations, although this is reviewed formally at least annually. The Board is considered well balanced in that:
- Mr Alan Broome, the Non-Executive Chairman, provides a sounding board for corporate strategy, a wealth of mining experience, is a metallurgist by training and is highly experienced in corporate governance. As such Alan is not involved with the day to day operations of the Company and provides guidance at the Board level. It is Management (notably John Peters and Peter Wale) who have the responsibility to formulate overall strategy, propose it to the Board, adjust the strategy for Board feedback and then enact the approved startegy.
- John Peters, the Managing Director, brings in-depth strategic management and investment banking experience. His practical management has helped to focus the members of the Company and its consultants on the overall strategy while managing the hands on, day to day, management needed.
- Peter Wale, the Executive Director, provides an invaluable bridge to shareholders providing insights into shareholder requirements as well as monitoring and handling media aspects. Peter, along with John Peters, manage the Company’s interface with Shareholders, Media and the Investment Community.
- Jeffery Harrison, the Non-Executive Director, provides practical mining operational skills to reviewing planned developments, has led the safety culture within the Company and maintains a complete independence in reviewing decisions. Jeff performs this role divorced from the running of the Company and, as such, is very independent when performing his duties as a Director.
All Directors are encouraged to use their independent judgement and to challenge all matters, whether strategic or operational.
In line with the appointment in 2018 of the fourth Director, the Board considered there was sufficient scope to establish separate sub-committees around Safety (chaired by Jeff Harrison) and Audit (chaired by Peter Wale). The responsibilities for remuneration within the Company continues to be shared by the entire Board. Given the composition of the Board and the size of the Company, it is felt a separate Nomination Committee is not yet warranted. However, as the Company's operations expand, the Board will monitor this aspect of operations and will respond accordingly. The Board collectively undertakes the function of such a committee and where conflicts arise the Directors exclude themselves from voting on such matters.
Attendance at Board and Committee Meetings
The Company reports on the number of Board and committee meetings held during the year and the attendance record of individual Directors in its Annual Report.
Directors’ conflict of interest
The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.
Re-election of Directors
The Company’s Articles of Association require that one-third of the Directors must stand for re-election by shareholders annually in rotation and that any new Directors appointed during the year must stand for election at the AGM immediately following their appointment.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
Biographies for the Directors can be found in the ‘Board of Directors and Corporate Management’ section of this website. The Board is not dominated by one person or group of people.
The Board undertakes regular reviews of its capacity to guide the Company in seeking to implement the Company’s strategy. The appointment of Jeff Harrison in 2018 illustrates how the Board, realising the need to increase its collective mining operational experience added a fourth Director with such skills. The Board also reviews periodically the appropriateness and opportunity for continuing professional development whether formal or informal.
All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense. In addition, the Directors have direct access to the advice and services of the Company Secretary and Chief Financial Officer.
Principle 7: Evaluate the Board performance based on clear and relevant objectives, seeking continuous improvement
Given the size of the Company and the small but critical nature of the roles of the Directors, board performance measurers have not been independently developed. The Company relies upon the market and shareholder feedback to assess the Board’s performance.
Principle 8: Promote a culture that is based on ethical values and behaviours
The Directors recognise that their decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board seeks to embody and promote a corporate culture that is based on sound ethical values as it believes the tone and culture set by the Board impacts all aspects of the Company, including the way that employees and other stakeholders behave.
The Company has adopted a code for Directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.
The formation of the Safety Committee and the manner in which options are allocated to Directors and key management/consultants has created a team environment in which the running of the company is aligned with medium to longer term shareholder goals.
These measures enable the Company to determine that ethical values and behaviours are recognised and respected.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
As a resource development company, the Board considers the crucial governance structures and processes revolve around Safety and Audit.
Safety is a critical matter, particularly given the capacity for harm to employees and consultants. The purpose of the Safety committee is to ensure that our vision, to provide a safe workplace where no harm comes to anyone, is applied at all of the Company’s locations and that a culture of Safety purveys throughout the organisation.
The Company believes that all reasonable efforts should be undertaken to ensure incidents are prevented, management have ultimate accountability for health and safety but everyone on site has a responsibility to ensure no one comes to harm and employees have the responsibility to stop any job or activity they believe is unsafe and could cause harm to people.
The Safety Committee attempts to monitor, and report to the full Board, on the achievement of the Company in devoting the necessary resources needed to create a working environment, both physically and supervisorial, in which our people and others under our influence and control can work without sustaining injury or suffering ill health; ensuring no business target takes priority over health and safety; using risk assessments to identify hazards and unsafe behaviours and introduce actions to reduce the risk to acceptable levels; investigating and reporting all accidents and dangerous occurrences and preventing future incidents; setting safety targets with the aim of preventing incidents and accidents and communicate the performance to all employees; ensuring all employees are competent to carry out the tasks assigned to them by providing the relevant information, instruction, training and supervision required; encouraging everyone to contribute to working safely and preventing accidents; designing, constructing, operating and maintaining all equipment, buildings and structures to ensure a safe operation; and comply with all current legislation and codes of practice.
The purpose of the Audit Committee is to provide formal and transparent arrangements for considering how to apply the financial reporting and internal control principles set out in the Corporate Governance Guidelines for Smaller Quoted Companies, and to maintain an appropriate relationship with the Company's auditors. The key terms are as follows:
- to monitor the integrity of the financial statements of the Company and Group, and any formal announcement relating to the Company's performance;
- to monitor the effectiveness of the external audit process and make recommendations to the Board in relation to the appointment, re-appointment and remuneration of the external auditors;
- to keep under review the relationship with the external auditors including (but not limited to) their independence and objectivity; and
- to keep under review the effectiveness of the Company's financial reporting and internal control policies and systems.
Further details of board committees are given under Principle 5 above. Terms of reference for the board committees can be found here: [insert link].
Suitability of governance structures
The Board intends that the Company’s governance structures evolve over time in parallel with its objectives, strategy and business model to reflect the development of the Company.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Directors believe a healthy dialogue exists between the Board, the Company’s shareholders and other stakeholders. The Board regularly has reports on shareholder feedback through summary of social media comments, shareholder information evenings and undertakes site visits and customer visits throughout the year.
In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting. The outcomes of all shareholder votes are disclosed in a clear and transparent manner via a regulatory information service, such as RNS of the London Stock Exchange.
The Company includes historical annual reports, notices of general meetings and RNS announcements over the last five year on its website. The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board.
The Company intends to include, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees.